Exhibit 99.1
ACETO CORPORATION ANNOUNCES SECOND QUARTER FINANCIAL RESULTS
LAKE SUCCESS, NY - February 9, 2006 - Aceto Corporation (NASDAQ:ACET), a global
distributor of chemically-derived pharmaceuticals, biopharmaceuticals, specialty
chemicals and agrochemicals, today announced results of operations for its
fiscal 2006 second quarter and six months ended December 31, 2005.
Net sales for the second quarter were $69.5 million, compared to $76.7 million
in the second quarter of fiscal year 2005. This decline reflects the previously
disclosed decrease in sales of two active pharmaceutical ingredients (APIs) due
to intense competition. Sales of those two products in the second quarter of
fiscal year 2006 were $1.3 million, compared with $6.6 million in the second
quarter of fiscal year 2005, a decrease of $5.3 million. Additionally, the
Company's foreign subsidiaries, primarily its German and French operations,
experienced a $3.4 million decrease in Health Sciences sales due to a shift in
the demand pattern, as well as a modification of the French government's generic
drug reimbursement policy, that caused delays in shipments. The Company believes
it will recover a portion of these sales in future periods. Aceto's domestic API
sales increased $1.4 million during the second quarter of fiscal 2006 as
compared to the second quarter of last fiscal year.
Net income was $1.5 million or $0.06 per diluted share in the second quarter of
fiscal 2006 (which included a $0.01 per diluted share charge for exiting the
facility previously occupied by the Company's former Institutional Sanitary
Supplies segment) versus $2.0 million or $0.08 per diluted share in the same
quarter last year.
Net sales for the six months ended December 31, 2005 were $144.5 million
compared to $157.2 million in the same period of the prior year, due to the
aforementioned factors. Net income was $3.5 million or $0.14 per diluted share
in the first half of fiscal 2006, compared to $5.3 million or $0.22 per diluted
share in the same period of fiscal 2005.
Aceto closed the second quarter in a strong financial position, highlighted by
working capital of $97.4 million, no long-term debt, and shareholders' equity of
$108.8 million at December 31, 2005.
Leonard S. Schwartz, Chairman, CEO, and President of Aceto, stated, "Our results
for the quarter were slightly ahead of our expectations, due in part to our
successful efforts to cut SG&A expenses while maintaining full operational
capability and efficiency. Excluding the $0.38 million one-time charge for
exiting the Institutional Sanitary Supplies facility, SG&A was $9.3 million,
which was the lowest quarterly level in two years. We expect to further reduce
SG&A marginally in the coming quarters. While our core business is performing
reasonably well, particularly in light of the continuing competitive market
conditions in generic drugs, we are committed to expanding our business via our
Strategic Growth Initiatives, which are as follows:
o Veterinary Vaccines - Our submissions to the USDA for a range of
vaccines for companion animals are in the final stages of review. We
anticipate approval in May/June of this year and expect to commence
commercial sales immediately thereafter, as we have a definitive
marketing plan in place and are in contact with prospective customers.
These products will be sold under the Aceto label, which is a first for
the Company.
o Human Biopharmaceuticals - We are pleased that progress has been made
recently in the EU towards approval of a major generic biopharmaceutical
and hope it will influence US regulators and Congress to create a
pathway for approval in the US. This is sorely needed to combat the
continuing rise of health care costs, particularly in
biopharmaceuticals. We would like to caution that there is no definitive
time frame for approval in the U.S. However, if the approval in the U.S
occurs, we are prepared to capitalize on Aceto's unique position, with a
range of 38 products that we can bring to market.
o Finished Dosage Forms - We previously disclosed that we were
investigating selling finished dosage forms directly into distribution
channels. We can now report that we have identified eight viable
products to date for this initiative, for which we have a highly
qualified, long-standing supplier of APIs who has moved downstream to
dosage forms. We are working to expand the range of products that we can
offer, aiming to increase it to 20 products. Our work in the marketplace
is continuing and we believe that,
given the viability of supply, of which we are quite confident, we will
enter distribution channels with finished dosage forms, sold either
under our label or private labels of our customers.
o Chemicals and Colorants - We are very pleased that the Chinese chemical
industry continues its rapid growth and we are investing resources in an
effort to bring new Chinese products to the US and European chemical
markets. Aceto's strengths in sourcing and supplying a wide range of
products are unique, and our considerable operations in Shanghai support
this activity.
o Agrochemicals - We are on track to launch four new products before the
end of calendar 2007, as we have previously disclosed."
Mr. Schwartz concluded, "In the third quarter of fiscal 2006, we expect to earn
approximately $0.08 per diluted share. We continue to be optimistic about
Aceto's long-term prospects and look forward to reporting on the Company's
developments."
CONFERENCE CALL
Leonard S. Schwartz, Chairman, CEO, and President, and Douglas Roth, CFO, will
conduct a conference call at 10:00 a.m. ET on Thursday, February 9, 2006.
Interested parties may participate in the call by dialing 888-787-0577
(706-679-3204 for international callers). Please call in 10 minutes before the
call is scheduled to begin. The conference call will also be broadcast live over
the Internet via the Investor Relations section (CONFERENCE CALLS) of Aceto's
website. To listen to the live call please go to the website at least 15 minutes
before the call to register, download and install any necessary audio software.
The conference call will be archived on Aceto's website, and a recorded phone
replay of the call will be available from 12:00 noon ET on Thursday, February 9,
2006, until 5:00 p.m. ET on Friday, February 10, 2006. Dial 800-642-1687
(706-645-9291 for international callers) and enter the code 4859940 for the
phone replay.
ABOUT ACETO
Aceto Corporation, which was incorporated in 1947, is a global leader in the
distribution and marketing of biopharmaceuticals, chemically-derived
pharmaceuticals, specialty chemicals and agrochemicals used principally as raw
materials in the agricultural, color, pharmaceutical, surface coating/ink and
general chemical consuming industries. With offices in ten countries, Aceto
distributes over 1,000 chemicals in these and other fields.
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
are based on current expectations, estimates and projections of management.
Aceto intends for these forward-looking statements to be covered by the
safe-harbor provisions for forward-looking statements. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates,"
or variations of such words are intended to identify such forward-looking
statements. The forward-looking statements contained in this press release
include, but are not limited to, statements regarding approval of applications
for, and sales of, veterinary vaccines, emergence of a market for human generic
biopharmaceuticals, entering distribution channels with finished dosage forms,
continued rapid growth in the Chinese chemical industry, launching four new
agrochemical products before the end of calendar 2007, results for the third
quarter of fiscal year 2006, and prospects for long-term growth. All
forward-looking statements in this press release are made as of the date of this
press release, and Aceto assumes no obligation to update these forward-looking
statements whether as a result of new information, future events or otherwise,
other than as required by law. The forward-looking statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those set forth or implied by any forward-looking statements. These
uncertainties include, but are not limited to, the mix of products sold and the
profit margins thereon, order cancellation or a reduction in orders from
customers, competitive product offerings and pricing actions, the availability
and pricing of key raw materials, dependence on key members of management, risk
of entering into new European markets, continued successful integration of
acquisitions, economic and political conditions in the United States and abroad,
as well as other risks detailed in the Company's SEC reports, including the
Company's Form 10-K and other filings. Copies of these filings are available at
WWW.SEC.GOV.
CONTACT: -OR- INVESTOR RELATIONS COUNSEL:
Aceto Corporation The Equity Group Inc.
Leonard S. Schwartz, Lauren Till
Chairman/CEO/President (212) 836-9610, LTILL@EQUITYNY.COM
Douglas Roth, CFO WWW.THEEQUITYGROUP.COM
(516) 627-6000
WWW.ACETO.COM
ACETO CORP.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net sales $ 69,467 $ 76,738 $ 144,460 $ 157,187
Cost of sales 57,999 63,456 120,489 130,390
------------ ------------ ------------ ------------
Gross profit 11,468 13,282 23,971 26,797
Gross profit % 16.51% 17.31% 16.59% 17.05%
Selling, general and
administrative expenses 9,657 10,189 20,019 19,619
------------ ------------ ------------ ------------
Operating income 1,811 3,093 3,952 7,178
Other income, net of
interest expense 358 286 1,117 815
------------ ------------ ------------ ------------
Income from continuing operations before income taxes 2,169 3,379 5,069 7,993
Provision for income taxes 622 989 1,521 2,234
------------ ------------ ------------ ------------
Income from continuing operations 1,547 2,390 3,548 5,759
Loss from discontinued operations, net of taxes - (438) (27) (431)
------------ ------------ ------------ ------------
Net income $ 1,547 $ 1,952 $ 3,521 $ 5,328
============ ============ ============ ============
Basic income per common share:
Income from continuing operations $ 0.06 $ 0.10 $ 0.15 $ 0.24
Loss from discontinued operations $ - $ (0.02) $ - $ (0.02)
Net income $ 0.06 $ 0.08 $ 0.15 $ 0.22
Diluted income per common share:
Income from continuing operations $ 0.06 $ 0.10 $ 0.14 $ 0.23
Loss from discontinued operations $ - $ (0.02) $ - $ (0.01)
Net income $ 0.06 $ 0.08 $ 0.14 $ 0.22
Weighted average shares outstanding:
Basic 24,273 24,163 24,280 24,145
Diluted 24,557 24,722 24,595 24,690
ACETO CORP.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
December 31, 2005 June 30, 2005
(unaudited)
----------------- -------------
ASSETS
Current Assets:
Cash in banks $ 23,561 $ 19,950
Investments 5,003 5,068
Trade receivables: less allowances for doubtful
accounts: Dec, $432; June $427 50,684 49,636
Other receivables 1,254 1,421
----------------- -------------
51,938 51,057
Inventory 51,930 51,722
Prepaid expenses and other current assets 1,500 821
Assets held for sale - 242
Deferred income tax benefit, net 2,799 2,780
----------------- -------------
Total current assets 136,731 131,640
Long-term notes receivable 591 624
Property and equipment, net 5,399 5,543
Goodwill 1,703 1,720
Intangible assets,net 3,798 3,153
Deferred income tax benefit, net 2,220 3,626
Other assets 2,615 2,722
----------------- -------------
Total Assets $ 153,057 $ 149,028
================= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Drafts and acceptances payable $ 2,409 $ 2,462
Short term bank loans - 126
Accounts payable 23,579 24,783
Note payable - related party 500 500
Accrued expenses 12,845 9,474
Liabilities related to assets held for sale - 46
----------------- -------------
Total current liabilities 39,333 37,391
Long-term liabilites 4,734 3,811
Minority interest 157 171
----------------- -------------
Total liabilities 44,224 41,373
Commitments and contingencies
Shareholders' equity:
Common stock, $.01 par value:
(40,000 shares authorized; 25,644 shares issued;
24,222 and 24,282 shares outstanding at
Dec. 31, 2005 and June 30, 2005, respectively) 256 256
Capital in excess of par value 56,727 56,903
Retained earnings 64,568 62,864
Treasury stock, at cost:
(1,422 and 1,362 shares at Dec.
31, 2005 and June 30, 2005, respectively) (13,735) (13,505)
Accumulated other comprehensive income 1,017 1,137
----------------- -------------
Total shareholders' equity 108,833 107,655
----------------- -------------
Total liabilities and shareholders' equity $ 153,057 $ 149,028
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